Dell gets lift from upbeat Goldman Sachs report

SAN FRANCISCO (MarketWatch) -- The potential for increased sales gains from new retail partnerships was among the reasons Goldman Sachs took a more upbeat view of Dell Inc., and as a result, the personal-computer giant's shares rose as much as 3% in Monday trading.

Goldman analyst Laura Conigliaro added Dell
DELL
to the brokerage's "conviction buy" list and raised her 12-month price target on Dell's stock to $35 a share from $33. Conigliaro said that "there are a number of opportunities for Dell's earnings to move higher," most of which haven't been taken into consideration in valuing Dell's stock.

Conigliaro said that one of the main reasons for adding Dell to the conviction buy list is the company's moves this year into the retail space, including deals that have put its PCs on the shelves as Wal-Mart Stores Inc.
WMT, -1.75%
and Staples Inc.
SPLS
in the United States, and Gome, China's largest electronics retailer.

Dell has been taking such steps to better address the consumer and small-to-medium-sized business market, and Conigliaro believes the deals could add as much as $1 billion to Dell's revenue next year. Conigliaro also said that she expects Dell to add more U.S. and international retail deals in the near future.

Conigliaro added that Dell's shareholders should see more value as the company increases its stock repurchases, and that the company could repurchase up to $8 billion worth of stock by the end of 2008. Conigliaro said such a buyback amount should add 2 cents a share to Dell's earnings next year.

The addition of Dell to Goldman's conviction buy list helped the company's shares rise to a 52-week high of $30.03 in Monday trading.

While Dell was being added to Goldman's conviction buy list, Conigliaro was removing Dell's top rival, Hewlett-Packard Co.
HPQ, -1.64%
from the same list. Conigliaro didn't have any negative comments about H-P and said she was keeping her buy rating on the company's stock, saying the company's business is strong in several areas. Conigliaro also said H-P is in position to beat her 82 cents a share earnings forecast for its current business quarter.

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